Definition
Free Alongside Ship (FAS) is a shipping term used in international trade to describe a transaction where the seller must deliver the goods to a specified port and place them alongside the vessel designated by the buyer. The seller assumes all costs and risks up to this point, including transportation to the port, loading onto trucks, and any export documentation. From this point on, the buyer takes over responsibility, covering the cost of loading the goods onto the vessel, marine freight, and subsequent expenses until the goods reach their final destination.
Examples
-
Automotive Parts Shipment: A car parts manufacturer in Japan agrees to ship automotive parts to a buyer in the United States using FAS terms. The manufacturer delivers the parts to the Port of Yokohama. From there, the American buyer arranges and pays for the loading onto a cargo ship, marine transport, and all other costs necessary to bring the goods to their factory in the U.S.
-
Electronics: A South Korean electronics company sells a batch of LCD screens to a European buyer on FAS terms. The seller organizes transport to the Port of Busan and ensures the screens are placed alongside the vessel. The buyer then handles loading them onto the ship, shipping, and any fees incurred upon arrival at a European port.
Frequently Asked Questions (FAQs)
Q1: What exact costs are covered by the seller under FAS terms? A1: The seller covers all transportation costs to the named port, export duties, and ensuring that the goods are delivered alongside the vessel. Costs such as packaging, inland freight, and handling at the port are typically included.
Q2: What are the buyer’s responsibilities under FAS? A2: The buyer must cover the cost of loading the goods onto the vessel, marine freight, insurance (if any), import duties, product unloading, and transporting the goods to the final destination.
Q3: How does FAS differ from FOB (Free on Board)? A3: Under FAS, the seller’s responsibility ends once the goods are delivered alongside the vessel. In contrast, under FOB, the seller’s responsibilities include loading the goods onto the vessel.
Q4: Can FAS be used for air shipments? A4: No, FAS is specified for sea or inland waterway transport only. Air and other forms of transport have different terms appropriate for their logistics.
Q5: What happens if the goods are damaged before reaching the port? A5: If the goods are damaged before they are delivered alongside the ship at the port, the seller is responsible since the risk does not transfer to the buyer until that point.
Related Terms
Free on Board (FOB)
- Definition: A trade term that requires the seller to deliver goods on board a vessel designated by the buyer. The seller fulfills their obligation and risk transfers to the buyer when the goods pass the ship’s rail.
Cost, Insurance, and Freight (CIF)
- Definition: Involves the seller covering the cost of goods, marine insurance, and freight to the destination port. The risk transfers to the buyer once the goods pass the ship’s rail at the shipping port.
Ex Works (EXW)
- Definition: The seller makes the goods available at their premises. The buyer bears all risks and costs from that point onward, including loading, transportation, and export formalities.
Delivered at Place (DAP)
- Definition: The seller delivers when the goods are made available to the buyer at the named place of destination, ready for unloading. The seller covers all risks up to that named destination.
Online References
- International Chamber of Commerce - Incoterms 2020
- Investopedia on Incoterms
- Export.gov – Incoterms Definitions
Suggested Books for Further Studies
- Incoterms 2020 by the International Chamber of Commerce (ICC) - A comprehensive guide to Incoterms 2020 rules and their application in global trade.
- Global Trade and Business Strategy by Alan E. Branch - Provides insights into global logistics, transport modes, and international trade terms.
- The Handbook of International Trade and Finance by Anders Grath - Covers various aspects of international trade, including documentation, terms, and financing.
Fundamentals of Free Alongside Ship (FAS): International Trade Basics Quiz
Thank you for exploring the intricacies of the Free Alongside Ship (FAS) Incoterm and testing your knowledge with our sample quiz questions. Continue to deepen your understanding of international trade logistics!